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Empirical Bayes shrinkage (mostly) does not correct the measurement error in regression

Jiafeng Chen, Jiaying Gu, Soonwoo Kwon

arXiv 24 Mar 2025 · Econometrics

arXiv:2503.19095 · PDF · Extracted main text

Abstract

In the value-added literature, it is often claimed that regressing on empirical Bayes shrinkage estimates corrects for the measurement error problem in linear regression. We clarify the conditions needed; we argue that these conditions are stronger than the those needed for classical measurement error correction, which we advocate for instead. Moreover, we show that the classical estimator cannot be improved without stronger assumptions. We extend these results to regressions on nonlinear transformations of the latent attribute and find generically slow minimax estimation rates.

Citation extraction

44
references
101
in-text mentions
44
distinct cited
4
self-citations
10,352
main-text words

appendix boundary found by appendix_command · 78% of the source is main text. Read the extracted text to check this.

Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Chen, J (2025) Empirical bayes when estimation precision predicts parameters self1.00063100%
2Gilraine, M., Gu, J. and McMillan, R (2020) A new method for estimating teacher value-added self0.92843100%
3Feng, J. and Jaravel, X (2020) Crafting intellectual property rights: Implications for patent assertion entities, litigation, and innovation0.87452100%
4Bau, N. and Das, J (2020) Teacher value added in a low-income country0.85113462%
5–-, –- and Rockoff, J. E (2014) a)0.81142100%
6Angrist, J., Hull, P. and Walters, C (2023) Methods for measuring school effectiveness0.73732100%
7Cai, T. T. and Low, M. G (2011) Testing composite hypotheses, hermite polynomials and optimal estimation of a nonsmooth functional0.73732100%
8Chandra, A., Finkelstein, A., Sacarny, A. and Syverson, C (2016) Health care exceptionalism? performance and allocation in the us health care sector0.73732100%
9Fuller, W. A (1987) Measurement error models0.73732100%
10–- and –- (2005) b)0.69351100%

Showing the top 10 of 44 scored citations.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
1Automatic Inference for Value-Added Regressions0.40511